IRS, Tax related strategies--Traders Message Board

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Strategies & Market Trends : IRS, Tax related strategies--Traders

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To: Sword who wrote (816)	4/18/1999 1:33:00 AM
From: Nelson Chang	Read Replies (1) of 1383

>>>The whole idea of wash sales is to prevent a trader from selling at a loss before the end of the year, only to buy the stock back again right after Dec 31, thereby locking in a capital loss even though the trader intends to keep the stock. The IRS doesn't like you messing with their head like that! They don't want you to claim a capital loss by flipping stock just for tax reporting purposes.<<< This is not entirely true either. Lets say I bought stock a month ago. Sell at a loss now. Buy back tomorrow with the intent of holding it for the "long-term" (ie. 1 year). I did not buy the stock back after Dec. 31. The loss is still the result of a wash sale and cannot be reported as a loss. It must be reported as raising the cost basis of the 2nd purchase. But yes I also understand your point. Which is why I opted for trader status and mark-to-market accounting in which it doesn't matter either way. Saved me the headache, and allowed for certain trading expenses to be deducted.

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